G7 ministers seek to calm markets

FINANCE ministers from the Group of Seven richest industrialised nations have attempted to calm nervous stock markets with a statement that the global economy is on the road to recovery.

G7's latest pronouncement, which follows a two-day meeting at the weekend in Halifax, Nova Scotia, comes after shares around the world plunged to their lowest level since 11 September. The FTSE 100 index fell 141.1 points to 4630.8 on Friday, wiping £34bn off investors' wealth.

Despite their upbeat public statement, some individual finance ministers expressed concerns about Japan and about the profitability of US companies, which have been hit by a wave of sleaze, insider dealing and accounting scandals.

A federal jury in Houston, Texas, at the weekend convicted accountancy firm Andersen of obstructing justice by tampering-with documents relating to its audit of Enron. A series of other big name US companies, including conglomerate Tyco and biotech specialist ImClone, are also embroiled in controversy. Dealers are bracing themselves for more red screens.

Outspoken hedge fund manager Crispin Odey says the FTSE will plunge to 3300 as the bear market turns into a 'depression'. Market strategists at Merrill-Lynch warn that 'signs of extreme negative sentiment' are hitting shares. Stock markets have also been overshadowed by fears over the financial strength of life assurance companies, which may be forced to sell shares and buy bonds in order to meet Financial Services Authority solvency requirements.